After Bond-Sale Earnings, Transportation Trust Fund Will Be Broke

New Jersey is planning to sell $627 million in bonds tomorrow, the final issuance in a five-year Transportation Trust Fund finance plan and one that will bring the state a big step closer to running out of cash for new infrastructure projects.

The bond sale is the largest component of the transportation-spending plan for the current fiscal year, which was patched together by Gov. Chris Christie’s administration to get the state through the final year of his five-year plan.

Once the money that’s being raised by tomorrow’s bond sale is used up, there will be no dollars left for new transportation projects unless lawmakers take action to renew the trust fund before the current fiscal year ends on June 30, 2016.

Despite the looming deadline, legislative leaders are still trying to figure out exactly how to renew the fund, and how to convince Christie, a Republican running for his party’s presidential nomination, to accept the most likely solution, an increase of the state’s gas tax. But the bond sale did bring one sign of hope; reports from credit-rating agencies saying there are now some signs that New Jersey’s finances are improving.

Lawmakers have known for some time that the trust fund, which spends more than $3 billion annually, counting federal dollars, on road, bridge and rail projects throughout the state, is only months away from going broke. That’s because the fund is deep in debt, and all of the revenue coming in from New Jersey’s 14.5-cent gas tax is now committed to paying down that credit-card bill. The fund will also reach its borrowing ceiling with this week’s bond sale.

But the issue was put on the backburner for most of the year by both Republicans and Democrats in the run-up to the Assembly elections that were held earlier this month. Further, it has not been a point of emphasis at all for Christie as he continues to pursue the GOP’s 2016 presidential nomination with frequent out-of-state travel.

Still, this week’s issuance of the final set of bonds helps emphasize just how close the state is getting to a transportation-funding crisis.

“The well is dry,” said Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Bergen). “There is no more borrowing, there is no more Band-Aid you can throw on the TTF.” Sarlo and other Senate Democrats have spent the last several weeks trying to tell the other side of the gas-tax story, holding a series of events to demonstrate the impact that investment in areas like education and infrastructure can have on the broader state economy and residents’ quality of life.

From shortened commutes and cheaper automobile-repair bills to increases in property values, they’ve also tried to make the case that New Jersey motorists will be better off in the long run by continuing or even expanding the state’s transportation-spending plan.

But the likely solution to the funding crunch, an increase in the state’s 14.5-cent gas tax, remains unpopular among New Jersey voters. The results of a survey released last week by Quinnipiac University showed that 62 percent of the state’s voters oppose a hike in the gas tax, even though it is the second-lowest among U.S. states and was last increased more than two decades ago.

Those results followed the release last month of a survey conducted by the Rutgers-Eagleton Poll that found 57 percent opposition to a gas-tax hike.

And lawmakers will also have to win approval for any plan they come up with from Christie, who in appearances in New Jersey this year has not ruled out a gas-tax increase, saying only that any deal should bring overall “tax fairness” to New Jersey taxpayers, meaning a cut of some other state tax.

But Christie has also shifted further to the right this year on several key issues as a presidential candidate, including endorsing the anti-tax pledge of an influential Washington, D.C.-based group, Americans for Tax Reform.

That has raised concerns among state lawmakers that the future of the state’s transportation system could get caught up in presidential politics.

A deal on transportation spending was once expected before the end of the year, but there are now signs the issue could drag into 2016 without a solution. And a contract the state was expected to enter into with a financial advisor for transportation-capital planning after soliciting bids over the summer has still not been awarded.

“He’s going to have to sit down with our leadership and work out the details,” said Senate Majority Leader Loretta Weinberg (D-Bergen) following a news conference held in Bergen County last week to highlight a planned expansion of light rail into Englewood that could be funded with a robust state transportation-spending program.

“It takes people on both sides of that table to do it,” she said.

But while New Jersey has been hit with a series of credit-rating downgrades in recent years as the state’s economic recovery continues to lag the nation’s, and after Christie failed to fully fund his own major pension-reform initiative, the latest reviews issued by rating agencies in advance of this week’s bond sale offered some signs of hope.

Moody’s Investors Service referred to “some stabilization in budget performance, economy, and liquidity” in its review, which did not include an overall rating downgrade. And Fitch Ratings noted in its assessment of the bond sale, which also did not result in a downgrade, that tax collections have picked up in recent months.

“The state's recent revenue performance has been more positive, and the revenue forecast for the fiscal year that began on July 1, 2015 appears to be conservative, reducing the threat of late-year budget underperformance that has plagued the state in recent years,” the Fitch review said.

Chis Santarelli, a spokesman for the state Department of Treasury, said Fitch also maintained state’s credit outlook as “stable.”

“This report notes New Jersey’s outlook is stable and that the state is improving its fiscal health with increased pension payments and surplus, lower unemployment, and improved cash flow,” Santarelli said.

He did not comment on the review from Moody’s, which maintained New Jersey’s credit outlook as “negative.”